Earnings per Share

12 Months Ended

Dec. 31, 2020

18. Earnings per Share

The following table provides a reconciliation of net income and the number of shares of common stock used in the computation of basic EPS and diluted EPS (amounts in thousands, except per share amounts):



	For the Year Ended December 31,
	2020		2019		2018
Basic Earnings
Income attributable to STWD common stockholders	$	331,689	$	509,664	$	385,830
Less: Income attributable to participating shares not already deducted as non-controlling interests		(5,216)		(3,873)		(3,592)
Basic earnings	$	326,473	$	505,791	$	382,238

Diluted Earnings
Income attributable to STWD common stockholders	$	331,689	$	509,664	$	385,830
Less: Income attributable to participating shares not already deducted as non-controlling interests		(5,216)		(3,873)		(3,592)
Add: Interest expense on Convertible Notes (1)		*		12,354		25,148
Add: Loss on extinguishment of Convertible Notes (1)		*		—		2,099
Diluted earnings	$	326,473	$	518,145	$	409,485

Number of Shares:
Basic — Average shares outstanding		281,978		279,337		265,279
Effect of dilutive securities — Convertible Notes (1)		*		9,805		22,659
Effect of dilutive securities — Contingently issuable shares		383		360		546
Effect of dilutive securities — Unvested non-participating shares		122		210		—
Diluted — Average shares outstanding		282,483		289,712		288,484

Earnings Per Share Attributable to STWD Common Stockholders:
Basic	$	1.16	$	1.81	$	1.44
Diluted	$	1.16	$	1.79	$	1.42

(1)

The Company does not intend to fully settle the principal amount of the Convertible Notes in cash upon conversion. Accordingly, under GAAP, the dilutive effect to EPS for the years ended December 31, 2020, 2019 and 2018 is determined using the “if-converted” method whereby interest expense or any loss on extinguishment of our Convertible Notes is added back to the diluted EPS numerator and the full number of potential shares contingently issuable upon their conversion is included in the diluted EPS denominator, if dilutive. Refer to Note 11 for further discussion.

*Our Convertible Notes were not dilutive for the year ended December 31, 2020.

As of December 31, 2020, 2019 and 2018, participating shares of 14.4 million, 13.3 million and 13.8 million, respectively, were excluded from the computation of diluted shares as their effect was already considered under the more dilutive two-class method used above. Such participating shares at December 31, 2020, 2019 and 2018 included 10.6 million, 11.0 million and 11.9 million potential shares, respectively, of our common stock issuable upon redemption of the Class A Units in SPT Dolphin, as discussed in Note 17.